This man fought the CRA for 18 years — and recently, he won

Irvin Leroux, a 70-year-old former businessman living in Prince George, BC, recently became a hero to the taxpayers of Canada — although few of them know it yet. But among the inner circle of tax practitioners — the lawyers and accountants who fight Canada Revenue Agency every day — his name is quietly circulating. They are blogging about him and referring to him in submissions they make to tax court.

What did Leroux do that has the potential to benefit each and every Canadian taxpayer? He fought the CRA for 18 years — and recently, he won.

A decision handed down on April 30, 2014 by Madam Justice M.A. Humphries of the Supreme Court of British Columbia (Leroux v. Canada Revenue Agency 2014 BCSC 720) contained two extraordinary rulings: first, that the CRA owed a duty of care to Leroux to deal with him in a non-negligent manner; and second, that the CRA had breached its duty of care by slapping Leroux with huge penalties for errors in reporting his income — errors he did not actually make.

Imagine the consternation that must have prevailed in CRA offices across Canada when they read that decision. What? We have to treat taxpayers fairly? We have to use care when we do their assessments? We have to actually know the law ourselves before we penalize some poor schmuck for allegedly not knowing it? Oh, no! We’ll have to revamp our entire modus operandi!

But despite winning these important legal rulings for the taxpayers of Canada, Irvin Leroux is not a happy man today. The fly in the ointment? The judge found insufficient evidence that the CRA’s treatment of him had led inexorably to his financial ruin. He had not “demonstrated a causal link between the negligence of CRA in imposing unjustified penalties . . . and the consequent loss of his [business] and home.”

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I spoke recently to a Toronto tax lawyer, someone who has chosen to make his career litigating against the CRA. Many of his clients have suffered financial disaster like Leroux’s following an audit by the CRA. He chuckled woefully at the judge’s error. If he had been the judge, he said, he would immediately have understood how the large penalties and liens imposed upon Leroux had led to his financial difficulties. “I deal with the CRA daily . . . and I see it on a daily basis,” he said.

Leroux has launched an appeal against the ruling. But his lawyer Laurie Armstrong has retired. No one is representing Leroux at the moment.

My employer, the Canadian Constitution Foundation, has assisted Leroux since 2010 in retaining and paying counsel. But now we are bumping up against a curious problem: We’ve achieved our goal even though Leroux hasn’t achieved his. Our mandate is to advance the rights and freedoms of Canadians. We’ve done that by establishing in reported case law that the CRA must treat taxpayers in a careful and non-negligent manner. But it’s not within our mandate to get compensation for one individual when a judge has made the judgment call (erroneous in our view) that his mistreatment didn’t cause his financial disaster.

We are still trying to help Leroux find someone who would be willing to take on his appeal. We know for sure that the case will be time-consuming. (The CRA has already launched a cross-appeal, complaining because the judge did not force Leroux to pay the CRA’s legal costs when he had, in the final result, lost the case.) The prospective lawyer probably won’t be able to afford to do this pro bono. It would simply take up too much time for anyone who has to make a living.

Any taxpayer who wants to thank this hero for bringing some discipline to an out-of-control government agency can go to the site and donate to help him continue his lonely battle. I’ve just kicked off the campaign with a personal donation of $100. Please help continue the fight.

And — oh, yes — if you happen to be a tax lawyer who relishes kicking the CRA’s butt in this appeal, please let me know.

Karen Selick is the litigation director for the Canadian Constitution Foundation.

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